Earnings Preview: tw telecom, Inteliquent, Cogent

Three competitive network operators, each with a different focus, report earnings this week: telecom later today, Inteliquent (NASDAQ:IQNT, news, filings) tomorrow morning, and Cogent Communications (NASDAQ:CCOI, news, filings) on Thursday. My guesses this quarter seem a bit more conservative than the composite street numbers, but here's a quick preview of what we might expect to see from each:

As it continues to pad its 16,000 on-net building list with about 500 every quarter, tw telecom stands poised to accelerate its rate of growth. It's rapidly data and internet services revenues should surpass the contribution of its other three segments (network services, voice, and intercarrier compensation) combined. That being said, the company's numbers rarely surprise anyone by much in either direction. Reductions in intercarrier compensation are the only headwind, but traders will be looking to see if there is a more aggressive stance on hand. tw has been rolling out the next generation of its Ethernet services, which it added to today with national availability of dynamic capacity. Here are my guesses for their Q2 numbers in context.

($ in millions)

Q2/11

Q3/11

Q4/11

Q1/12

Q2/12

(my guess)

- Data & Internet Services

158.2

164.7

171.6

176.8

184.1

- Network Services

88.9

86.9

85.4

84.8

85.0

- Voice Services

83.6

85.2

86.7

89.6

88.5

- Intercarrier Compensation

8.7

7.7

7.6

7.6

7.4

Total Revenue

338.4

344.5

351.5

358.9

365.0

M-EBITDA

123.2

125.0

128.1

131.8

133

M-EBITDA Margin

36.4%

36.3%

36.3%

36.7%

36.5%

Earnings per share

0.09

0.10

0.11

0.13

0.14

Revenue Churn

0.9%

1.0%

0.8%

1.0%

~1%

Capital Expenditures

90.9

86.0

86.6

79.1

~85M

On-net buildings added

569

561

566

467

~500

Free Cash Flow

16.5

23.2

25.6

37.3

~30

Inteliquent - With its rebranding from the Neutral Tandem and Tinet names complete, Inteliquent has been busy bringing to market its hosted cloud communications offerings. The expenses come first of course, which has been dragging down margins, but they have projected organic growth in their full year numbers. This will probably come mostly from voice and Ethernet growth, with IP pricing pressure still a force - although I look forward to any details on that front. Here are my guesses in context.

($ in millions)

Q2/11

Q3/11

Q4/11

Q1/12

Q2/12(my guess)

FY12guidance

Revenue

65.1

67.3

69.5

70.7

72.0

290-300

Adj. EBITDA

22.8

21.0

22.1

21.3

22.0

85-90

Adj. EBITDA Margin

35.0%

31.2%

31.7%

30.2%

30-31%

Earnings per share

0.20

0.18

0.19

0.21

0.20

Billed Minutes

32.5

32.9

33.3

34.4

35-36

141-147

Capex

7.2

6.8

2.4

9.1

~7

30-35

Cogent Communications - Cogent spent the first quarter doing damage control after the loss of those Megaupload revenues, shifting expenses to match and promising a swift return to growth. Meanwhile, we've learned from Telegeography that IP transit pricing has been pressured all year, and currency effects in Europe surely will take a bite out of things. Nevertheless, the market is expecting them to post a fairly aggressive quarter. My own guesses are slightly more conservative: